US data points to start of the interest rate cutting cycle

Loading player...
US data released this past week points to less concern about inflation and more concern about the labour market. The Federal Reserve has kept interest rates unchanged at 5.25% to 5.50%, and the forward guidance is a more confident outlook for inflation, with the Fed comfortable of reaching its inflation target within the next year or so.
The Fed is now focusing more on its dual mandate of keeping inflation under control and ensuring the labour market remains strong.
The deterioration in the US labour market, as the unemployment rate moved from 4.1% to 4.3% in July, and inflation mostly under control, are justifying that it is time to start the interest rate cutting cycle, and the Fed is expected to cut rates by at least 25 basis points in September, and to continue cutting interest rates thereafter.
Labour market conditions have slowed meaningfully and suggest that the US economy is going to lose momentum, and that the risk of recession has risen appreciably, while financial markets have only priced for a moderate slowdown in activity.
Click here to listen to the podcast
5 Aug 2024 English South Africa Investing · Business News

Other recent episodes

US labour market strengthens, Fitch rerates SA credit

In this podcast, STANLIB’s Chief Economist, Kevin Lings, discusses US labour market data, where the US created 172 000 jobs in May, way more jobs than anticipated, with the previous two months also revised higher. He also looks at Fitch’s decision to upgrade SA’s credit rating one notch to BB,…
8 Jun 11 min

SARB aims to check rising inflation with 25 bps interest rate hike

In this podcast, STANLIB’s Chief Economist, Kevin Lings, discusses the SARB’s decision to hike interest rates by 25 bps and the risk of more hikes if the US/Iran conflict continues. The SARB indicated it was concerned about second-round effects from the higher oil price and remains determined to achieve its…
1 Jun 14 min

Retail sales tempered as inflation bites into consumer pockets

In this podcast, STANLIB’s Chief Economist, Kevin Lings, discusses Moody’s encouraging review of SA from stable to positive, although GDP growth is necessary to get a full upgrade. April inflation, which is up at 4%, reflects a sizeable increase in food prices and an adjustment to medical aid inflation, while…
25 May 12 min

Sustained high oil price puts pressure on US and SA monetary authorities

In this podcast, STANLIB’s Chief Economist, Kevin Lings, discusses the upcoming SA Reserve Bank Monetary Policy Committee meeting, when a 25 bps interest rate hike is expected, as well as latest US inflation data. US CPI in April rose 3.8% y/y – and this does not yet fully reflect the…
18 May 10 min